164. Baking it Down - Loss Leaders

Baking it Down with Sugar Cookie Marketing 🍪

Send us a text

🍗 Loss Leaders - How losing can help you win.
In this week's Baking it Down Podcast - Episode 164 - Loss Leaders, we covered, well, what a loss leader is and how to implement it as a marketing strategy in your baking business.

💰 If you've been to Costco (formerly Price Club) anytime in the last 2 decades, you've seen (or smelled) their rotisserie chickens priced at $4.99 - a staggeringly affordable price that hasn't changed since 2000 (💸 save one price bump in 2008 which was reverted a year later in 2009).

Costco loses money on each of these birds. 🤑 Why? It's their loss leader. These underpriced prepped chickens get people into Costco stores, where, according to the CEO in 2015, these rotisserie chickens bring in $30 - $40 million dollars of additional product sales.

🤔 How? By pricing something like these chickens ridiculously low, they get people into Costco stores. They position these loss leaders deeper into the store near things you'd typically grab when you make a grocery run. The more you grab on your "I'm just picking up a rotisserie chicken" fueled grocery run, the more money Costco makes - by you buying other non-bird related things.
So - cool for Costco, but how can we take this "loss leader" strategy into baking? ✌️ Full confession - we use it in our memberships. Our "loss leader" tier is the $2 Transfer Club. Priced at, you guessed it, $2/mo, this membership gets you an instant download of over 180 digital transfer sheets. That makes each sheet less than $.01. But on Etsy, a similar royal icing transfer sheet can cost around $3 - $4.

🤔 "Why undercharge so much, twins?"

Because with such a low buy-in of $2, you've made an account on our membership platform. Switching to a membership like The Class Kits or The Cookie College is as simple as two clicks now. Plus - 🤝 we're able to build trust with you since I promise members 1 transfer a month but I deliver members around 4 - 8 transfers a month. If you like how you spent your $2 with me, imagine how much you'd love The Cookie College.

Okay - let's bring it back to baking. How can we implement the Loss Leader strategy for home-based bakers?
1. Car Cookies.

I like this one - 🚗 car cookies as your bakery's loss leader. I like it mostly because it means you've already made money before losing it. A car cookie (also known as a "thank you cookie") is a cookie affixed to an order going out. It's intended to give the purchaser a taste test of their order which is often intended to be a gift they'll never get a bite of. 🤤 Now they'll be hooked on that delish sugar cookie recipe you've got and come back for more.
2. Free Samples + Taste Testers.

🍴🛑 Put down your pitchforks. I know "free" and "cookie" aren't words we readily use in the marketing group, but we're talkin' loss leaders here. Free samples (heyo - another Costco strategy) get folks in the door for events like markets and pop-ups. The odds of them buying are higher post-sample.

Another take on this approach is asking local community groups (while abiding by the no-selling rules) for taste testers to give you feedback on a new product. ⭐⭐⭐⭐⭐ This accomplishes two things: new people trying your products (and giving you feedback which is a bonus) + you're able to sell without selling when you make the post.
3. G-i-v-e-a-w-a-y-s.

When used sparingly, g-i-v-e-a-w-a-y-s can be a decent loss leader. 🧠 Keep in mind the disclaimer: how you get them is how you keep them, though. Too much f-r-e-e and you'll get folks who only jump on these types of promos.